US economy

Three key takeaways for investors from the US mid-term elections

As was widely predicted, the Democrats took hold of the House of Representatives, the lower chamber of Congress, in the US mid-term elections. Meanwhile, the Republican Party has managed to retain control of the upper chamber, the Senate, increasing its majority.

Here, we run through the possible implications as far as investors are concerned.

US markets hit new record high

Bears sound smart but bulls make money, goes the old investment adage. 

While not always true, it certainly has been over the past year when it comes to the US market. 

A strong dollar and escalating trade war risks derailing US economy

The strength of the dollar coupled with presi­dent Donald Trump’s sabre-rattling soap opera on trade war has put our panel of asset allocators more on the defensive. The global growth num­bers remain too strong to persuade any of them to call an end to the long bull market in equities. But cash levels in their portfolios are rising, and the average score for global bonds (mostly US Treasury bonds) has edged higher.

Are share buybacks 'plundering company resources'?

Share buybacks by US companies have rocketed following president Donald Trump’s tax cuts. The windfall the cut provided has allowed firms to dedicate record-breaking amounts to buying back their own stock. Almost $437 billion in buyback plans were announced in the second quarter of 2018, up from $242 billion in the previous three months, according to investment research firm TrimTabs.

After Facebook’s fall, is the FAANG rally over?

For the past few years, so called FAANG stocks (Facebook, Apple, Amazon, Netflix and Google, owned by Alphabet) have seemed unstoppable. Despite the warnings from bears that we were in a new tech stock bubble and the shares were trading far above fair price, valuations continued the rise. This year too, FAANG stocks have been the strongest performers on the US market. Indeed, without the growth of FAANG share prices, the S&P500 would be in negative territory in the first half of 2018.

Sovereignty – is it coming home?

We always knew Brexit was going to be fraught with political turmoil and now it really has kicked off: first David Davis’ resignation and now Boris Johnson. We hear that they hadn’t actually seen the proposal at Chequers beforehand, which tells us that Theresa May has now taken the gloves off and is willing to call time on those not entirely falling into line. She may fall on her sword in the process and who knows what that will then deliver in terms of her replacement and from which party.

The US: Stars, Stripes and Share Buybacks

As Americans celebrate their Independence Day public holiday this Wednesday with barbecues, picnics, parades and fireworks, they do so against the backdrop of an economy that is in rude health. Unemployment is at an 18-year low of 3.8 per cent, wage growth appears to be stabilising at around 2.7 per cent, business investment is up and lower taxes are having a positive impact.

Have markets grown used to Trump’s showmanship?

June 14, 2018

You need not have read or seen the news over the weekend, but you would have got the gist of how well the G7 summit went from one photograph. It was the photo of several G7 leaders standing round a table looking at Donald Trump who was sat down with his arms crossed. It was a scene that most people will be familiar with, that is if you have ever seen parents scolding a petulant child.

A trade war between the US and China would be bad for everyone

Chances are that most investors are not familiar with Reed Smoot or Willis Hawley. But you may soon be hearing a great deal more about this pair of obscure US lawmakers who sponsored the US Tariff Act of 1930. Almost 90 years after their legislation triggered a global trade war widely blamed for plunging the world economy into the Great Depression, president Donald Trump’s US administration stands accused of posing a similar threat, much to the chagrin of financial markets.